The Energy Efficiency and Conservation Bill 2023 (EECB) was recently passed by the Dewan Rakyat on 11.10.2023. The bill aims to regulate the efficient consumption of energy and conservation of energy with the aim of improving and increasing energy efficiency and to avoid the wastage of energy in Malaysia.
The EECB is in line with the energy transition initiative towards achieving net zero greenhouse gas (GHG) emissions by energy-related sectors by 2050. Further, the EECB is one of the initiatives launched under the National Energy Transition Roadmap with the aim of achieving the following targets:
By 2040, achieve energy savings of 21% compared to business-as-usual scenario (residential: 15%; industrial and commercial: 22%)
By 2050, achieve energy savings of 22% compared to business-as-usual scenario (residential: 20%; industrial and commercial: 23%)
The EECB also aims to support sustainable development which is consistent with the green economic development agenda under the 12th Malaysia Plan.
The Energy Commission
Based on the blue paper circulated in the Parliament, the EECB set out the appointment of the Energy Commission (EC) to advise the Minister in all matters relating to energy efficiency and conservation. The Commission would also have:
(a)The authority to recommend to the government any policy, laws, action and measures
(b)To promote, develop or implement policies and initiatives relating to energy efficiency and conservation.
Energy users exceeding the threshold value of 21,600 gigajoules per year are also required to implement energy-saving measures, which include the mandatory appointment of registered energy managers to develop energy management systems and conduct energy audits. Compliance is estimated to reduce electricity bills by up to 25%.
Applicability
The EECB will apply to:
(a)Any energy consumer whose energy consumption for a period of twelve consecutive months equals to or exceeds the energy consumption threshold as may be prescribed.
(b)Any building as described in the Third Schedule of the EECB.
(c)Any energy-using product as specified in the guidelines.
Additionally, when enacted, the EECB seeks to cover 1,500 out of 27,000 industrial consumers, representing 70% to 80% of industrial consumption and 500 out of 1.7 million commercial consumers making up 21% of commercial segment consumption. It also requires compliance by office buildings measuring 8,000 sq m and above to meet at least a two-star rating under the National Building Energy Label requiring building energy intensity of at least below 250 kilowatt-hour/sq m per annum. Currently, 300 government buildings comply with the requirements. Further, the EECA will cover hotels and hospitals eventually with an estimated 4,102 buildings to be covered under the law.
After the ECCB comes into force, the consumers will then have to conduct the first energy audit. The consumers will have a five-year period (one cycle) to meet compliance requirements and will be levied with a penalty for non-compliance after the second audit. The penalties range from RM20,000 to RM100,000.
The average compliance cost, covering the appointment of a registered energy manager, implementation of energy management, and energy audits for one cycle (five years) stands at RM120,000 a year for affected industrial users, and RM100,000 for commercial users.
Commentary
In summary, the EECB represents a comprehensive and forward-thinking approach by the Malaysian government to address energy efficiency and conservation. This legislation aligns with the global trend of transitioning to more sustainable and environmentally friendly energy practices. By setting long-term targets, entrusting the EC and imposing requirements on energy users, the EECB aims to make a substantial impact in reducing energy consumption and GHG emissions in Malaysia. While there may be initial compliance costs and penalties, the long-term benefits include reduced energy bills, a more sustainable energy sector, and a greener economy, which supports the nation's broader goals for sustainable development and environmental conservation.
8 November 2023